Thursday, September 20, 2007

Professor Susan O'Malley has simultaneously served as an officer of CUNY's faculty union, the Professional Staff Congress, and also as president of the CUNY faculty senate. In the two roles, which seem to conflict (faculty senate = employer; faculty union = employee representative), Professor O'Malley took a public position on the promotion application of Professor KC Johnson. This seemed to me not only inappropriate, but a breach of her fiduciary duty to Professor Johnson. I raised this issue with New York's Public Employee Relations Board, but New York's PERB was not interested even though the Taylor Law specifically prohibits management-dominated unions.

Professor Johnson ultimately won his promotion on appeal, and he is now probably the best (or one of a few best) known author(s) at Brooklyn College, with his recent book Until Proven Innocent. At the time of his promotion battle Johnson had much better credentials than most of the faculty deciding his case, yet the issue of Johnson's "collegiality" was the academic Babbitts' rallying cry. Professor O'Malley was one of those criticizing Professor Johnson.

One would therefore expect Professor O'Malley to attempt to resolve her ongoing conflict with Professor Karkhanis in a "collegial" manner. Perhaps she might write a letter to Karkhanis; invite him out for lunch; or ask Karkhanis to serve on an academic committee. But no, Professor O'Malley's definition of "collegiality" is: if someone disagrees with you, then try to fire them (Johnson). If that doesn't work, send them a lawyer's letter (Karkhanis).

O'Malley's actions once again demonstrate that those who raise issues of "collegiality" in faculty personnel committees are often vicious liars who aim to deflect their true, defamatory intent.

"CUNY professor and former chair of the Faculty Senate Susan O’Malley was the subject of a few issues of The Patriot Returns last spring. In the March 12 issue of The Patriot Returns, Karkhanis wrote an article called “MOHAMMED ON HER MIND!,” with the subheading, “O’MALLEY’S OBSESSION WITH FINDING JOBS FOR TERRORISTS.” Karkhanis refers in that issue to O’Malley’s attempt, at a Faculty Senate meeting, to find a job at CUNY for Mohammed Yousry, who was convicted of conspiring in the plot to bomb the World Trade Center in 1993. Citing Faculty Senate meeting minutes, Karkhanis wrote that O’Malley “was not going to rest until she got this convicted terrorist a job.” Karkhanis was not the only one to criticize O’Malley—FIRE Adviser and Phi Beta Cons contributor Candace de Russy blogged about O’Malley’s advocacy for hiring Yousry and about Karkhanis’ coverage on March 26"

The letter alleges that Karkhanis's remarks about O'Malley are defamatory, yet O'Malley is a tenured academic likely nearing retirement who is likely entitled to a hefty, low-tier CUNY pension (the earlier cohorts of CUNY faculty enjoyed much more generous pensions than the later ones). Since there are no damages, the only purpose of a law suit is to suppress Karkhanis's speech and to intimidate him. The law suit threat is not only evidence of O'Malley's lack of collegiality, but her intent to suppress all who disagree with her left-wing views.

President Ahmadinejad is to speak at Columbia University. However, last year a riot of left wing student-bigots prevented Jim Gilchrist from speaking at Columbia University. Columbia failed to protect Mr. Gilchrist. Although I would not object to Mr. Ahmadinejad's speaking at any university,* Lee Bollinger and Columbia have failed to provide an even playing field or a forum that supports academic freedom. I have sent the following e-mail to Mr. Bollinger:

Dear President Bollinger: I just received an e-mail, an excerpt of which is below, which notes that while Columbia has invited Mr. Ahmadinejad it has suppressed a presentation by Jim Gilchrist. I am sure that you have not personally encouraged this, but you have through inaction permitted one-sided free speech for the left, and “politically correct” suppression of those who support US interests and freedom. I urge you to do a better job, not of stopping Ahmadinejad from speaking, but of creating a public impression on all ideological sides that you are truly encouraging academic freedom rather than a suppressive left wing ideology.

Sincerely,

Mitchell Langbert, Ph.D., ‘91

>”University President Nicholas Murray Butler, who invited Nazi ambassador Hans Luther to campus in December 1933, insisting, against student protests, that Luther "'represented the government of a friendly people,' and therefore was 'entitled to be received . . . with the greatest courtesy and respect.'" *****Butler was Columbia U pres from 1902-1945. If they could, they would have had Hitler on campus in 1933, and Jefferson Davis during the Civil War. They just rejected an invitation for the return engagement of Jim Gilchrist and now they are inviting Ahmadinejad. Bollinger made a statement and is going to ask him some tough questions. Really? Columbia has just hit bottom.”

*My beloved wife, Freda, debated this point with me after two martinis at the Bear Restaurant in Woodstock, NY. She may have a point that inviting a holocaust denier like Ahmadinejad to a university is a bit over the top. But I do think that even the fringe views of despicable bigots and holocaust deniers like Mr. Ahmadinejad should not be suppressed but rather refuted.

Tuesday, September 18, 2007

About 20 minutes ago Bloomberg television reported that the Fed cut its benchmark rate by .5% to 4.75%. This cut was on the high end of its expected actions. The Dow ended the day 335 points higher (I think it had been down about 40 points before the announcement). As I blogged yesterday, cutting reinforces Ben Bernanke's and the Fed's new role of casino manager who, by selling ever more poker chips, takes ever greater risks of a run on the casino, a run which would put many Americans into the poor house. Of course, there are two effects of increasing the number of poker chips, or should I call them dollars. The first is a run up in asset valuations (because low interest rates increase the present value of earnings and because firms need to pay less when they borrow). In the past, this lead to an increase in employment, but in recent years has stimulated cost cutting as executives have been keen to boost stock valuations and so move their plants overseas. The second is inflation. Since the poor consume their income, inflation hurts them the most. Since the wealthy hold stocks and real estate, asset run ups help them. The result is increasing income inequality.

The MSM avoids discussion of this tautological, rather obvious relationship among inflation, asset run ups and income inequality, mainly because Wall Street and other wealthy asset holders don't like to admit that they are wealthy because of government welfare via the Fed. For example, the Economist of September 15-21, 2007 (p. 15) carries a leader that emphasizes the short run relationship between job creation and economic growth on the one hand and interest rates on the other. To its credit, the Economist argues that

"lower interest rates will not achieve all that much...it would be irresponsible of them to slash the Fed funds rate...Nor will a moderately lower Fed funds rate do much to stop the economy from slowing...History suggest (Wall Street) may not (react modestly to the size of the cut)"

But the Economist, friend of the City of London and Wall Street, avoids discussion of the implications of rate cuts for income inequality.

Monday, September 17, 2007

The New York Sun, New York's best newspaper, has run a front page editorial concerning the dollar, which the Sun argues, should be called the "Greenspan" instead of the "greenback". The reasons are in part that Greenspan's biography the Age of Turbulence came out today; the Fed's Open Market Committee will meet tomorrow to discuss whether to lower interest rates (depreciating the dollar further); and the Sun is increasingly concerned about the depreciating gold value of the dollar. Over the past two years the Sun has editorialized that the dollar declined from 1/265th ounce of gold in 2000, when President George W. Bush took office, to 1/500th of an ounce of gold in December 2005, to 1/637th of an ounce of gold in November 2006 to, well Kitco reports at 3:17 that gold has risen to $717 in light of tomorrow's Fed meeting, so it's 1/717th of an oz. of gold per dollar.

The problem facing the dollar is in some ways like previous inflations, such as the German inflation of the 1920s. In some ways, though, it is unique because never before has a fiat currency both served as a worldwide medium of exchange and been subject to aggressive depreciation in value. There are a number of interesting ramifications of this story that my friend Howard S. Katz has exposed through the years in his book The Paper Aristocracy; through his blog and through his investment advisory services.

First, Katz has brought the effects of monetary expansion on income inequality to the attention of libertarian politicians such as Ron Paul and to the attention of all who will listen. The left's game plan, evidenced during the great depression, has been to use disruption caused by mismanagement of the money supply, such as the 1929 stock market crash, the depression of the 1930s and the concomitant political strains, to agitate for quack nostrums like extension of government regulation that does nothing to cure the monetary problem and instead cripples the economy and interferes with legitimate business. Once again, we see an increase in agitation concerning income inequality just as the past two decades' monetary expansion is peaking.

Second, the effects on income inequality this time, which Katz discusses in his blog, may be more extreme than in the past. Because the monetary expansion has not resulted in the same degree of inflation as it normally would, interest rates have been reduced to very low levels, corporate profits have been energized and stock markets boosted to high levels. This seems to have turned Keynesianism on its head. The traditional Keynesian model is that stimulation of economic activity would create new jobs (hence the Phillips curve's trade off between inflation and unemployment) and workers would not object to the erosion of their real wages, essentially because they are suckers.

Instead, in the late 20th century and early 21st century world, which is far more globalized than Keynes's world of the 1930s, monetary stimulus may have reduced demand for US labor even as real wages have fallen. It may have done so because executives have been granted stock options that motivate them to maximize shareholder value more aggressively than they did in the prior postwar period. Rather than risk a higher degree of innovation, the executives focused on cost cutting, i.e., moving plants and services, to include white collar ones, to lower wage countries. These steps had some effect on stock values, enhancing the income inequality that naturally occurs because of monetary expansion and that is part and parcel of what the Fed does. Thus, traditional Keynesian economics has become not only a kind of deception (relying as it does on monetary illusion) as it has always been, but also has become increasingly outdated because of globalization. Real wages are stagnant; the stock market increases; but high paying jobs flee the country, all due to the Fed's monetary policy combined with aggressive stock option programs.

Third, the Fed now functions like a casino manager. The US dollar does not function just as a traditional money supply that provides a store of value; a medium of exchange; a unit of account and a standard of deferred payment. Rather, the dollar has become a commodity that is held by investors all over the world as a form of speculation. This new function puts the Fed in the role of casino game manager that needs to determine whether enough "chips" have been manufactured---chips that have meaning only so long as there are gamblers to use them.

Although economists have meaningful credentials, there is no reason to believe that they understand how to market casino chips. I am sure that Ben Bernanke, like Alan Greenspan, is a brilliant guy, but he is no better at marketing than a layman. Should Americans have faith in an institution like the Fed, which claims to manage the money supply while quietly extending its role to facilitator of a global crap shoot? Isn't it time to rethink the Fed altogether?

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Mitchell Langbert

About Me

I have researched and written about employee benefit issues and in my previous life was a corporate benefits administrator. I am currently associate professor of business at Brooklyn College. I hold a Ph.D. from the Columbia University Graduate School of Business, an MBA from UCLA and an AB from Sarah Lawrence College. I am working on a project involving public policy. I blog on academic and political topics.